5 Reasons Kids Need a Savings Account

Posted on April 10, 2024

IMAGE: Mom with kid putting coins into piggy bank

No matter a child’s age, introducing them to a savings account is a great way to teach money management skills. Learn more about why children benefit from having their own savings account and how to get started.

1. Learn How to Spend Wisely

Establishing responsible spending and savings habits at a young age sets them up for financial security for the future. By putting money into a savings account instead of spending it right away, kids can plan their spending wisely. It also introduces how to create a budget so that they’re in charge of their money. Learn more tips on teaching your children money management skills in the article, “Teaching Your Kids About Spending."

2. Keep Money in a Secure, Insured Place

While a piggy bank is a fun way for kids to learn how to save, it’s also easily accessible. Funds are less likely to be spent when they’re in a savings account, they’re protected from theft, and money grows over time by earning interest. Knowing that the account is insured provides even more peace of mind. Texell carries insurance on deposit accounts up to $500,000.1

3. Earn Interest While Saving

It’s fun for kids to watch their savings grow even if they’re not making deposits. The concept of compound interest is a valuable lesson that also encourages them to keep money in savings. Discuss how a savings account earns more interest by depositing more money over several months or years. Explain how savings accounts require a minimum daily balance to avoid a fee and to earn dividends from the interest. By understanding these concepts, they’ll develop an eagerness in savings and investments accounts as adults.

4. Understand How Accounts Work

Review the differences between checking, savings, and other accounts and explain how their savings account works. Talk about how they can transfer money from one to the other, but that they must keep budget and financial goals in mind before making any transaction.

Although it’s easy to track balances in digital banking, it may be difficult for kids to see numbers on a screen as real money. For a hands-on demonstration, use jars marked with checking, saving, and spending. Walk through different scenarios using coins to illustrate money transfers between accounts.

Besides learning about savings accounts, kids can also learn about emergency funds. While savings accounts are part of the budget, an emergency fund is for a one-time expense that isn’t planned. The unexpected can happen like a broken bike or car repair, and it’s important to teach kids how to set money aside to use only for those unexpected events.

5. Set Financial Goals

Once they’ve learned how accounts work, teach your kids how to make financial wish lists and goals. If they want to save to purchase a big item, set smaller goals along the way to track their progress. Achieving these goals builds confidence and responsibility. By learning how to set financial goals or even save for college, they’ll understand the valuable lesson of financially planning for their future.

Texell’s Dollar Squad Account

Texell offers accounts that grow with your child. For kids 12 and under, Dollar Squad savings accounts earn dividends on balances of $5.002 or more. Deposits also earn Squad Dollars that are redeemable for fun prizes in the Squad Store, shipped directly to you. Thr!ve Teen accounts are also available for ages 13-17 and offer excellent benefits and rewards.3 Learn more about Dollar Squad and Thr!ve accounts or call or text 254.773.1604 for more information.

1 Deposits insured up to $500,000 through a combination of coverage provided by NCUA and private insurance provided by ESI.

2 You must maintain the disclosed minimum daily balance in your account to obtain the disclosed Annual Percentage Yield. You will not earn dividends on any day your account balance is below the required minimum daily balance.3 Gifts with qualifying account activity.

If you wish to comment on this article or have an idea for a topic we should cover, we want to hear from you! Email us at editor@texell.org.

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